Personal Finance Issues This Midterm Election Season

Several significant personal finance issues are weighing on voters’ minds and wallets as they walk to the elections.

The Fed raised interest rates by 0.7524 percentage points this week to combat inflation, causing the stock market to fall further.

Meanwhile, a MassMutual Mutual Bank poll released Thursday found that 84 percent of Americans are worried about the impact of a prolonged economic drop on their finances, with fears of a recession rising. “They’re going after your Social Security and Medicare hugely,” President Joe Biden warned in a Tuesday speech in Hallandale Beach, Florida.

The Inflation Reduction Act introduced Medicare measures to lower drug prices for retirees. However, Biden said. Republicans might try to block those improvements. He also mentioned potential threats to Social Security based on Republican policies, including those of Senators of Florida and Wisconsin. However, both lawmakers have denied any attempt to harm the program.

In Congress, Scott has proposed reauthorizing Social Security and Medicare every five years, but Johnson supports reconsidering the programs annually. Some Republicans are advocating for the extension of key provisions of President Donald Trump’s landmark 2017 tax cut before the 2018 elections.

These lawmakers targeted individual tax benefits, a 20% tax deduction for so-called pass-through businesses, and other policies slated to expire after 2025.

Tax and Wages

Even if Republicans gain control of both chambers, they will lack the required 60 votes in the Senate to overcome the filibuster, and Biden has stated that he will not sign these bills into law.

This month, voters in Nebraska, Nevada, and Washington, D.C., will decide whether to raise the minimum wage.

In Nebraska, the initiative would raise the minimum wage from $9 to $15 per hour by 2026.

Meanwhile, the minimum wage for all existing workers in Nevada will rise to $12 an hour by 2024. The current minimum wage is $9.50 an hour or $10.50 an hour, depending on whether the employee has health insurance.

Provided it receives enough votes. The D.C. ballot initiative would phase away the tipped wage, which permits companies to pay less than the minimum wage of $16.1023 if their tips cover the difference. Following the pandemic, union support is at an all-time high. A recent Gallup poll shows more than 70% of Americans support labor unions.

The outcome of a midterm election ballot proposal could hasten that growth: Illinois voters will determine whether or not to grant employees the fundamental freedom to organize and bargain collectively. If the provision becomes law, “it would represent a huge and significant national strong support for workers’ rights,” said Daniel Galvin, an associate professor at Northwestern University.

Millionaire Tax

Amid a nationwide tax-cut frenzy, California and Massachusetts will vote on Tuesday on whether to impose a “millionaire tax” on high earnings.

Starting Jan. 1, California’s Proposition 30 will impose a 1.75% tax on annual income above $2 million, on top of the state’s top income tax rate of 13.3%. The plan is to fund zero-emission vehicle programs and wildfire response and prevention.

The Fair Share Amendment in Massachusetts would charge a 4% tax on annual income above $1 million, in addition to the state’s 5% flat income tax, beginning in 2023, with plans to fund public education, roads, bridges, and public transportation.

According to a new Charles Schwab study, American employees believe they’ll need $1.7 million saved for retirement, but only about half believe they’ll be able to fulfill their savings targets.

This is understandable: Financial advisors often advise saving 10% to 15% of your gross annual pay for retirement, which is no easy task.

But don’t worry if you can’t save that much right now. On average, employer-sponsored retirement plan employees contribute around 7% of their salary to their retirement fund.

Although these calculations can give you information on how much you should be saving to meet a $1.7 million retirement savings target, they do not account for market volatility, unexpected life events, income increases, periods of unemployment, or the interest you’ll receive on your investments.